SVB Bank Run: Fed Calling Emergency Meeting

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Jesus, they're predicting bank runs on Monday. What is this, 1929?

Hold on to your butts folks. This could get ugly quick. What company in their right mind who does business with smaller/regional banks would keep funds over $250k in them now that they're watching SVB fail? It is scary to think how this could spread and cause a nation wide bank run.

That’s why depositors need to be made whole. It’s fine if equity holders in SVB lose out. But if people don’t have faith in smaller banks, this could spiral out of control extremely quickly.

No - they do not need to be 'made whole'. They were aware of FDIC when they opened their accounts (and were able to buy insurance for deposits that exceeded FDIC limits if they chose to do so.

If you think that depositors in any bank need to be 'made whole' if the bank collapses then we are into a completely different regulatory scenario.

If the feds are required to make depositors 'whole' if their bank collapses - then we really don't need private banks at all. Instead, the feds can just turn itself into a public-offering bank, accept all deposits and the associated liability.

Sorry but 'private banks accept the deposits + the profits, the feds pay back when that fails" isn't actually a thing.

If the depositors aren’t made whole, by St. Patrick’s Day most small banks in the US will be under siege and we will be in 1929 territory. We cannot have a banking system where any holdings over $250k in a bank is considered a risky investment. People are already pulling money out of the smaller banks. If there is a loss of faith in ALL smaller banks then the entire system collapses catastrophically.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Jesus, they're predicting bank runs on Monday. What is this, 1929?

Hold on to your butts folks. This could get ugly quick. What company in their right mind who does business with smaller/regional banks would keep funds over $250k in them now that they're watching SVB fail? It is scary to think how this could spread and cause a nation wide bank run.

That’s why depositors need to be made whole. It’s fine if equity holders in SVB lose out. But if people don’t have faith in smaller banks, this could spiral out of control extremely quickly.

No - they do not need to be 'made whole'. They were aware of FDIC when they opened their accounts (and were able to buy insurance for deposits that exceeded FDIC limits if they chose to do so.

If you think that depositors in any bank need to be 'made whole' if the bank collapses then we are into a completely different regulatory scenario.

If the feds are required to make depositors 'whole' if their bank collapses - then we really don't need private banks at all. Instead, the feds can just turn itself into a public-offering bank, accept all deposits and the associated liability.

Sorry but 'private banks accept the deposits + the profits, the feds pay back when that fails" isn't actually a thing.

If the depositors aren’t made whole, by St. Patrick’s Day most small banks in the US will be under siege and we will be in 1929 territory. We cannot have a banking system where any holdings over $250k in a bank is considered a risky investment. People are already pulling money out of the smaller banks. If there is a loss of faith in ALL smaller banks then the entire system collapses catastrophically.

Really? Because that's been our banking system for a long time.

If this is such a potential crisis then why have the banks themselves (with the support of members of congress and Trump) being working to loosen regulations?

Surely if deposits over $250k were a potential 'risky investment' then surely you would have had an 'all hands on deck' effort (banks, regulators, members of congress, presidents) working day and night to increase the regulations on bank, insurance rules, and federal oversight.

but for some strange reason you've seen the exact opposite.

I agree this is a terrible situation. And given the terrible fallout i have no doubt that all the good faith people complaining about this fiasco (and not at all looking for a bailout) will make it a major priority to improve the regulatory system to ensure this will never happen again.

[Anonymous]

Depositors are not traditionally seen as "investors" in a bank. The bank is seen as a safe repository of the depositor's assets.

Post 2013 Cyprus bail in, making large depositors take haircuts or be converted to shareholders in a new bank, is now seen as the more palatable option to taxpayer bail outs.

[Anonymous]

The people working in the financial regulatory agencies on these issues have always viewed the depositors as sacrosanct. You don’t touch them because it just kicks off a bunch of other earthquakes that you can’t control.

The Fed and OCC will move heaven and earth to protect the depositors and get their money immediately. They also need to calm the rest of the market, so something like unlimited discount window access is on the table for Banks experiencing heightened deposit outflows.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Jesus, they're predicting bank runs on Monday. What is this, 1929?

Hold on to your butts folks. This could get ugly quick. What company in their right mind who does business with smaller/regional banks would keep funds over $250k in them now that they're watching SVB fail? It is scary to think how this could spread and cause a nation wide bank run.

That’s why depositors need to be made whole. It’s fine if equity holders in SVB lose out. But if people don’t have faith in smaller banks, this could spiral out of control extremely quickly.

No - they do not need to be 'made whole'. They were aware of FDIC when they opened their accounts (and were able to buy insurance for deposits that exceeded FDIC limits if they chose to do so.

If you think that depositors in any bank need to be 'made whole' if the bank collapses then we are into a completely different regulatory scenario.

If the feds are required to make depositors 'whole' if their bank collapses - then we really don't need private banks at all. Instead, the feds can just turn itself into a public-offering bank, accept all deposits and the associated liability.

Sorry but 'private banks accept the deposits + the profits, the feds pay back when that fails" isn't actually a thing.

If the depositors aren’t made whole, by St. Patrick’s Day most small banks in the US will be under siege and we will be in 1929 territory. We cannot have a banking system where any holdings over $250k in a bank is considered a risky investment. People are already pulling money out of the smaller banks. If there is a loss of faith in ALL smaller banks then the entire system collapses catastrophically.

Really? Because that's been our banking system for a long time.

If this is such a potential crisis then why have the banks themselves (with the support of members of congress and Trump) being working to loosen regulations?

Surely if deposits over $250k were a potential 'risky investment' then surely you would have had an 'all hands on deck' effort (banks, regulators, members of congress, presidents) working day and night to increase the regulations on bank, insurance rules, and federal oversight.

but for some strange reason you've seen the exact opposite.

I agree this is a terrible situation. And given the terrible fallout i have no doubt that all the good faith people complaining about this fiasco (and not at all looking for a bailout) will make it a major priority to improve the regulatory system to ensure this will never happen again.

Hmmmm. A regulatory system. Let's see now.

We have a budget proposal of 6.8T by Biden.

It was around 3.5T in the 2016-2017 timeframe.

We have high interest rates and inflation chasing each other b/c of endless money creation and MMT.

What regulation are you going to do?

The world is trying to divest OUT of the USD as a reserve currency because of wreckless spending constantly by DC.

Waybe the first regulation is a mandatory class in financial reality for all of Washington DC.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've seen several people whose credentials seem like they might be in a position to know what's going on with the banking system calling for a 50 bp emergency rate CUT and discount window opening first thing Monday.

Really? How would a rate cut address any of this? I could see them providing emergency supports to other banks to make sure they don't go under.

Chris Whalen describes it here in this podcast:
https://podcasts.apple.com/us/podcast/forward-guidance/id1592743188?i=1000603649088

Essentially, a rate cut + discount window resets expectations and settles down the jitters. This panic only gets worse if people make withdrawals. They need to halt withdrawals

And that is wrong.
How is a rate cut going to do anything on my fears as a small business owner to move my funds and liquidity to one of the SIB banks and short term treasuries? Not one single iota, I tell you!

The FED is fairly powerless to prevent a bank run.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Jesus, they're predicting bank runs on Monday. What is this, 1929?

Hold on to your butts folks. This could get ugly quick. What company in their right mind who does business with smaller/regional banks would keep funds over $250k in them now that they're watching SVB fail? It is scary to think how this could spread and cause a nation wide bank run.

That’s why depositors need to be made whole. It’s fine if equity holders in SVB lose out. But if people don’t have faith in smaller banks, this could spiral out of control extremely quickly.

No - they do not need to be 'made whole'. They were aware of FDIC when they opened their accounts (and were able to buy insurance for deposits that exceeded FDIC limits if they chose to do so.

If you think that depositors in any bank need to be 'made whole' if the bank collapses then we are into a completely different regulatory scenario.

If the feds are required to make depositors 'whole' if their bank collapses - then we really don't need private banks at all. Instead, the feds can just turn itself into a public-offering bank, accept all deposits and the associated liability.

Sorry but 'private banks accept the deposits + the profits, the feds pay back when that fails" isn't actually a thing.

If the depositors aren’t made whole, by St. Patrick’s Day most small banks in the US will be under siege and we will be in 1929 territory. We cannot have a banking system where any holdings over $250k in a bank is considered a risky investment. People are already pulling money out of the smaller banks. If there is a loss of faith in ALL smaller banks then the entire system collapses catastrophically.

++
Precisely this. There is zero risk for me as a business owner to move liquidity to treasuries and SIV banks. Keeping my liquidity in a small bank on the other hand is frought with very real risks now. Unless there is some sort of wonder, there will be a bank run on Monday and the FED will be mostly powerless to do something against that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So there are all of these libertarians etc calling on the Fed/FDIC to basically take over and secure the bank.

Keep in mind, this i only happening because Trump totally gutted regulations that would have prevented this from happening. So we are going to get a massive bailout for Silicon Valley Bank and yet people complain about a few thousand dollars in bailouts for student loans.

For one, the FDIC already took over the bank around 24 hours ago

Two, this is not caused by Trump gutting regulations. The cause was interest rate risk- recall people deposit money at banks and they turn around and lend money, in this case in the form of MBS and treasuries. The fed kept interest rates too low for too long and then they hiked rates precipitously, which caused huge losses for the bank on those securities that were purchased when interest rates were much lower

Disagree. Trump gutted Dodd-Frank that would have protected against this.

False. The regulations would not have helped in this case. The adverse interest rate risk scenario in the stress tests were not severe enough and SVB would easily have met the liquidity requirement.

There are a lot of people who would know a lot more than you who disagree.

[Anonymous]

Anonymous wrote:This bank has a lot of assets, very high ratio. It appears to have failed because of a run on the bank.
The asset ratio is so high, everyone should be able to get their money out eventually.
This bank funds silicon valley startups, so they should make those companies and the VCs that wanted these loans pay up.

A run caused by Peter Theil. He truly hates this country and is doing everything he can to harm the economy and our national security.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Jesus, they're predicting bank runs on Monday. What is this, 1929?

Hold on to your butts folks. This could get ugly quick. What company in their right mind who does business with smaller/regional banks would keep funds over $250k in them now that they're watching SVB fail? It is scary to think how this could spread and cause a nation wide bank run.

That’s why depositors need to be made whole. It’s fine if equity holders in SVB lose out. But if people don’t have faith in smaller banks, this could spiral out of control extremely quickly.

No - they do not need to be 'made whole'. They were aware of FDIC when they opened their accounts (and were able to buy insurance for deposits that exceeded FDIC limits if they chose to do so.

If you think that depositors in any bank need to be 'made whole' if the bank collapses then we are into a completely different regulatory scenario.

If the feds are required to make depositors 'whole' if their bank collapses - then we really don't need private banks at all. Instead, the feds can just turn itself into a public-offering bank, accept all deposits and the associated liability.

Sorry but 'private banks accept the deposits + the profits, the feds pay back when that fails" isn't actually a thing.

If the depositors aren’t made whole, by St. Patrick’s Day most small banks in the US will be under siege and we will be in 1929 territory. We cannot have a banking system where any holdings over $250k in a bank is considered a risky investment. People are already pulling money out of the smaller banks. If there is a loss of faith in ALL smaller banks then the entire system collapses catastrophically.

Really? Because that's been our banking system for a long time.

If this is such a potential crisis then why have the banks themselves (with the support of members of congress and Trump) being working to loosen regulations?

Surely if deposits over $250k were a potential 'risky investment' then surely you would have had an 'all hands on deck' effort (banks, regulators, members of congress, presidents) working day and night to increase the regulations on bank, insurance rules, and federal oversight.

but for some strange reason you've seen the exact opposite.

I agree this is a terrible situation. And given the terrible fallout i have no doubt that all the good faith people complaining about this fiasco (and not at all looking for a bailout) will make it a major priority to improve the regulatory system to ensure this will never happen again.

Hmmmm. A regulatory system. Let's see now.

We have a budget proposal of 6.8T by Biden.

It was around 3.5T in the 2016-2017 timeframe.

We have high interest rates and inflation chasing each other b/c of endless money creation and MMT.

What regulation are you going to do?

The world is trying to divest OUT of the USD as a reserve currency because of wreckless spending constantly by DC.

Waybe the first regulation is a mandatory class in financial reality for all of Washington DC.

And then Trump became president, blew a hole in the national debt giving these same billionaires a windfall, cut regulations and then left office with the economy in shambles.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Jesus, they're predicting bank runs on Monday. What is this, 1929?

Hold on to your butts folks. This could get ugly quick. What company in their right mind who does business with smaller/regional banks would keep funds over $250k in them now that they're watching SVB fail? It is scary to think how this could spread and cause a nation wide bank run.

That’s why depositors need to be made whole. It’s fine if equity holders in SVB lose out. But if people don’t have faith in smaller banks, this could spiral out of control extremely quickly.

No - they do not need to be 'made whole'. They were aware of FDIC when they opened their accounts (and were able to buy insurance for deposits that exceeded FDIC limits if they chose to do so.

If you think that depositors in any bank need to be 'made whole' if the bank collapses then we are into a completely different regulatory scenario.

If the feds are required to make depositors 'whole' if their bank collapses - then we really don't need private banks at all. Instead, the feds can just turn itself into a public-offering bank, accept all deposits and the associated liability.

Sorry but 'private banks accept the deposits + the profits, the feds pay back when that fails" isn't actually a thing.

If the depositors aren’t made whole, by St. Patrick’s Day most small banks in the US will be under siege and we will be in 1929 territory. We cannot have a banking system where any holdings over $250k in a bank is considered a risky investment. People are already pulling money out of the smaller banks. If there is a loss of faith in ALL smaller banks then the entire system collapses catastrophically.

++
Precisely this. There is zero risk for me as a business owner to move liquidity to treasuries and SIV banks. Keeping my liquidity in a small bank on the other hand is frought with very real risks now. Unless there is some sort of wonder, there will be a bank run on Monday and the FED will be mostly powerless to do something against that.

Oh stop being a nervous ninny, trying to cause a bank run. Looks like the short sellers have entered the thread.

The Fed can help prevent bank runs by opening the discount window and swapping Treasuries for TBills. Which is very likely the course of action that will happen tomorrow. Further, very few banks will see the level of deposit run-off that SVB experienced. The Fed has something like 500B of short term securities on its balance sheet, so that should be enough to meet elevated demand.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Jesus, they're predicting bank runs on Monday. What is this, 1929?

Hold on to your butts folks. This could get ugly quick. What company in their right mind who does business with smaller/regional banks would keep funds over $250k in them now that they're watching SVB fail? It is scary to think how this could spread and cause a nation wide bank run.

That’s why depositors need to be made whole. It’s fine if equity holders in SVB lose out. But if people don’t have faith in smaller banks, this could spiral out of control extremely quickly.

No - they do not need to be 'made whole'. They were aware of FDIC when they opened their accounts (and were able to buy insurance for deposits that exceeded FDIC limits if they chose to do so.

If you think that depositors in any bank need to be 'made whole' if the bank collapses then we are into a completely different regulatory scenario.

If the feds are required to make depositors 'whole' if their bank collapses - then we really don't need private banks at all. Instead, the feds can just turn itself into a public-offering bank, accept all deposits and the associated liability.

Sorry but 'private banks accept the deposits + the profits, the feds pay back when that fails" isn't actually a thing.

If the depositors aren’t made whole, by St. Patrick’s Day most small banks in the US will be under siege and we will be in 1929 territory. We cannot have a banking system where any holdings over $250k in a bank is considered a risky investment. People are already pulling money out of the smaller banks. If there is a loss of faith in ALL smaller banks then the entire system collapses catastrophically.

Really? Because that's been our banking system for a long time.

If this is such a potential crisis then why have the banks themselves (with the support of members of congress and Trump) being working to loosen regulations?

Surely if deposits over $250k were a potential 'risky investment' then surely you would have had an 'all hands on deck' effort (banks, regulators, members of congress, presidents) working day and night to increase the regulations on bank, insurance rules, and federal oversight.

but for some strange reason you've seen the exact opposite.

I agree this is a terrible situation. And given the terrible fallout i have no doubt that all the good faith people complaining about this fiasco (and not at all looking for a bailout) will make it a major priority to improve the regulatory system to ensure this will never happen again.

Hmmmm. A regulatory system. Let's see now.

We have a budget proposal of 6.8T by Biden.

It was around 3.5T in the 2016-2017 timeframe.

We have high interest rates and inflation chasing each other b/c of endless money creation and MMT.

What regulation are you going to do?

The world is trying to divest OUT of the USD as a reserve currency because of wreckless spending constantly by DC.

Waybe the first regulation is a mandatory class in financial reality for all of Washington DC.

Ginormous eyeroll for the guy making canned macro BS into the reason why some of the best resourced people in this society couldn’t manage simple interest rate risk.

[Anonymous]

Anonymous wrote:The people working in the financial regulatory agencies on these issues have always viewed the depositors as sacrosanct. You don’t touch them because it just kicks off a bunch of other earthquakes that you can’t control.

The Fed and OCC will move heaven and earth to protect the depositors and get their money immediately. They also need to calm the rest of the market, so something like unlimited discount window access is on the table for Banks experiencing heightened deposit outflows.

Yup, it’s just as ideological as you make it sound.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Jesus, they're predicting bank runs on Monday. What is this, 1929?

Hold on to your butts folks. This could get ugly quick. What company in their right mind who does business with smaller/regional banks would keep funds over $250k in them now that they're watching SVB fail? It is scary to think how this could spread and cause a nation wide bank run.

That’s why depositors need to be made whole. It’s fine if equity holders in SVB lose out. But if people don’t have faith in smaller banks, this could spiral out of control extremely quickly.

No - they do not need to be 'made whole'. They were aware of FDIC when they opened their accounts (and were able to buy insurance for deposits that exceeded FDIC limits if they chose to do so.

If you think that depositors in any bank need to be 'made whole' if the bank collapses then we are into a completely different regulatory scenario.

If the feds are required to make depositors 'whole' if their bank collapses - then we really don't need private banks at all. Instead, the feds can just turn itself into a public-offering bank, accept all deposits and the associated liability.

Sorry but 'private banks accept the deposits + the profits, the feds pay back when that fails" isn't actually a thing.

Great way to collapse the entire country and economy and we can live in Hoovervilles all over again. Where exactly can businesses store their money then just to function and to do things like pay payroll, buy supplies, and pay bills? If your small company has $10-20M, you cannot spread it out over multiple banks at $250k a clip. It is absolutely not feasible. The economy only works when people have faith the banking system works. No banking and we go back to the stone age.

[Anonymous]

Anonymous wrote:All svb has to do is change the name to slava ukrani bank and it gets a full fed backstop

😂

Ain't gonna happen. Peter Thiel broke it. Let him and his rich libertarian buddies figure out how to backstop it without fed help.